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Financial service complaints up 26%

Financial service complaints up 26%

5 min read

May 20, 2011

Complaints about financial services companies increased by 26% in the last year as the amount of disputes linked to controversial payment protection insurance doubled, the Financial Ombudsman Service has said.

During the 2010/11 financial year, more than one million inquiries were made to the ombudsman by consumers - equal to around 4,000 every working day. Out of these, a fifth developed into formal complaints.

Over the period, the service dealt with a record 206,121 new disputes, with around half (51%) linked to payment protection insurance (PPI).

Some 104,597 complaints connected to PPI were looked at by the ombudsman, more than double the amount dealt with in the previous year, and the highest number of complaints relating to a single financial product.

The move has paved the way for more than three million people to receive compensation, while providers must also proactively contact customers and alert them to the fact that they may be entitled to redress if they identify a pattern of mis-selling.

The exercise is expected to cost firms between £7 billion and £9 billion, making the controversial product the biggest mis-selling scandal in the UK.

Natalie Ceeney, chief ombudsman, said: "This year has been the busiest in our 10-year history - with over 200,000 disputes referred to us and a million frontline inquiries."